2024 (1) TMI 797 - AT - Income Tax

Addition of cash deposit unexplained - assessee stated that the entire cash deposits were made out of cash balance available with him - HELD THAT - Assessee had made deposit in HDFC Bank out of cash balance available on various dates. We find from the said imprest account maintained in the books of Yash Impex, there is no negative cash balance of single date. Hence, we hold that the entire cash deposit made by the assessee in the bank account is properly explained with proper source. We also find that the assessee had given date wise details of cash deposits together with the respective source before the lower authorities. These facts are not properly appreciated by the lower authorities while adjudicating the issue in dispute. We also find from the audited balance sheet of Yash Impex as on 31.03.2012, on the asset side, a sum was shown under the head current asset as Surendra Kumar Gupta imprest. All these facts collectively could prove indeed have sufficient cash balance which explained the cash deposit made in the bank account. Hence, there is absolutely no case for making any addition on account of cash deposits in the hands of the assessee. Hence, we direct the ld AO to delete the addition made in the sum on account of cash deposit. Decided in favour of assessee.

Summary

Issues Involved:
The judgment involves issues related to addition made on account of cash deposit in the sum of Rs. 41,16,000/- and the validity of assumption under section 153A of the Income Tax Act, 1961.

Cash Deposit Issue:
The case pertains to a search and seizure operation under section 132(1) of the Act, where the assessee, an individual, had deposited cash in his bank account. The Assessing Officer treated the cash deposits as unexplained credit under section 68 of the Act. The assessee explained that the cash deposits were made from the cash balance available in the imprest account. The assessee provided details and documents supporting the source of the cash deposits. The Tribunal observed that the cash deposits were properly explained with a legitimate source. The Tribunal directed the Assessing Officer to delete the addition made on account of cash deposit.

Validity of Assumption under Section 153A:
The assessee challenged the validity of assumption under section 153A of the Act. However, no arguments were presented by the assessee, and the grounds were dismissed as not pressed. As the quantum appeal was decided in favor of the assessee, the concealment penalty levied under section 271(1)(c) was directed to be deleted.

In conclusion, the appeal of the assessee in the quantum proceedings was partly allowed, and the penalty levied under section 271(1)(c) was directed to be deleted. The judgment was pronounced on 16/01/2024.